CISA: Iron ore prices to move on a downward trend in May

Friday, 08 May 2020 15:20:06 (GMT+3)   |   Shanghai
       

According to a new report issued by the China Iron and Steel Association (CISA), weak demand for import iron ore worldwide due to the ongoing coronavirus pandemic will negatively affect steel production in Europe, the US and Japan, which will result in more iron ore circulating into China, and so import iron ore prices for China will likely edge down in the coming month.  

As of April 30 this year, imported iron ore inventory at Chinese ports totaled 114 million mt, down 2.97 million mt or 2.61 percent month on month. The lower inventories reflect stronger consumption in China and rising export volumes from Australia and Brazil after a reduction in the first quarter.

In the April 1-20 period this year, the average aggregate daily crude steel output of large and medium-sized steel enterprises in China - all CISA members - totaled 1.9616 million mt, up 5.52 percent compared to the same period of the previous month, signaling stronger demand for iron ore in April. However, the average daily crude steel output of all steelmakers in China is expected to amount to 2.6088 million mt in the April 1-20 period, up 2.4 percent month on month, but remaining far lower than the 2.8343 million mt recorded in the same period last year, pointing to the relative lack of strength of demand for iron ore.

According to the CISA, as of April 30, the composite steel price index (CSPI) for the Chinese market was down 2.61 percent compared to the end of March, falling to 96.62 points. However, the import China Iron Ore Price Index (CIOPI) was at $82.51/mt at the end of April, down 0.57 percent compared to the end of March. Import iron ore prices have shown a slower decline compared to finished steel prices, indicating there will be more room for iron ore prices to edge down in the future. Even taking into account the fact that local steel prices have increased in early May, steel production has almost reached a peak.

 

Amid increased supply of iron ore to China due to the negative impact of the coronavirus on steel production worldwide, the CISA foresees that iron ore prices for China will likely move on a downtrend in the coming period. 


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